Deadline Expires for Sale of Serbian Airline

With a deadline about to expire on Monday, no one has yet submitted an offer to purchase Serbia's ailing carrier, JAT, three months after Serbia's Ministry for Infrastructure announced a tender.

"If no company submits an offer we will probably have to use a back-up plan and form a new company on our own," sources in the Ministry for Infrastructure told Balkan Insight.

Under the back-up plan, JAT would first sell its ageing fleet of 12 aircraft, all of which are more than 20 years old. The next step would be for the state to set up a new, smaller company with about a third of the existing staff.

"The new company would have 400 employees, mainly from JAT," the ministry said. JAT now employs 1,230 staff.

The fleet would comprise five to seven new aircraft, leased for not more than a million euro per month, which would be financially bearable, given current income from ticket sales. Planes would only fly to the most profitable destinations.

The decision to set JAT was made after a working group and the company's own management concluded last April that the airline was unable to operate profitably. The new company might start operating by June next year.

This is not the government's first attempt to sell off the old Yugoslav national carrier, one of the world's oldest extant airlines.

The first tender was announced in the summer of 2008, but no company submitted an offer then, either. Russia's Aeroflot was widely touted as a likely new owner, but it withdrew.

A solution has since become more urgent, as the carrier has an old fleet of planes, far too many employees employees and survives from day to day on loans.

Turkish Airlines was seen as the most serious potential buyer. Its representatives negotiated with JAT throughout 2010. Turkish Airlines last year had the third highest air traffic volume in Europe.